Fiscal Cliff

Can't you ever admit you were off the mark?

If you really think that runaway inflation is the only problem facing Greece you are far more ignorant than even I imagine.

Well, it took all of five minutes.

Is there a more insipid response on the Internet than "sigh."

Hey One Eye, do me a favor and don't waste your time with me.

Forgive my ignorance, but why cant the Greeks print more of their own money?
I thought every country could print their own money.

Funny that Cyclo appears to think that that is an impossibility for us.

Everyone's talking about how brilliant the new Bloomberg Businessweek cover is.

We can understand why after the Fiscal Cliff nonsense (and imminent Debt Ceiling nonsense-on-stilts) this kind of cover appeals to people.

But in reality, it's inaccurate to depict the Congress as being all babies.

A lot of Congressmen on both sides of the aisle are adults trying to make deals, and look out for the interests of their constituents.

That being said, there is a pretty sizable faction of Fiscal Fanatics that thinks it's beneficial to go to the edge of a government shutdown/default. And they think that unless they get 100% of want they want, then they've done a complete sellout. Baby mentality. After all, the Fiscal Cliff deal preserved the Bush tax cuts for virtually all Americans, and yet most of the GOP in the House couldn't vote for it.

A number of folks in the media seem to get that there's something reckless about the Default Caucus of the GOP, but since they strive so hard for balance, they have to attack Obama for something too, and so they usually point to his lack of spending cuts.

A good example of that is the lead piece in POLITICO today about "Obama's debt problem," which paints the debt as a big Obama's failure:

The staggering national debt — up about 60 percent from the $10 trillion Obama inherited when he took office in January 2009 — is the single biggest blemish on Obama’s record, even if the rapid descent into red began under President George W. Bush.

Actually, the fact that unemployment is barely below 8% is the real Obama failure, much bigger than the deficit.

It goes on to talk about how 'opaque' Obama has been in terms of what spending he would cut, and how there's a looming day of entitlement reckoning:

During the cliff talks, Obama was purposely opaque about what cuts he’d ultimately accept, saying only that Republican resistance to a one-shot grand bargain meant he needed to make a deal in pieces — taxes first, spending second.

That tactic delayed but didn’t eliminate a looming day of reckoning on spending and entitlements that will come within 60 days thanks to the convergence of the debt ceiling deadline and the new deadline for keeping automatic cuts from kicking in.

The truth of the matter is that Obama has done more than the GOP in terms of trying to come to grips with entitlement spending.

The Washington Post reported last night that Obama had infuriated Democrats by agreeing a couple of weeks ago to adopt a "Chained CPI" (a change that would reduce annual increases in Social Security benefits). But the final day of the fiscal cliff fight, Republicans were attacking Obama for being open to this cut.

The GOP has a hard time saying yes to a Grand Bargain.

Greg Sargent at The Washington Post notes that the media is already getting rolled by the GOP on the debt ceiling fight, by buying into their view of it.

He notes three things that everybody needs to know, but which the media rarely reports:

1) Republican leaders will ultimately agree to raise the debt ceiling, and they know it, because they themselves have previously admitted that not doing so will badly damage the economy.

2) Because of the above, a hike in the debt ceiling is not something that Democratic leaders want and that Republican leaders don’t. In other words, it is not a typical bargaining chip in negotiations, in the way spending cuts (which Republicans want and Dems don’t) or tax hikes (which Dems want and Republicans don’t) are.

3) And so, if and when Republicans do agree to raise the debt ceiling, it will not constitute any kind of concession on their part — even though they will continue to portray it as such to demand concessions in return. It will only constitute Republicans agreeing not to damage the whole country, which does not constitute (one hopes) them making a sacrifice.

This last part is a key thing. Raising the debt ceiling isn't a concession, unless you think that the GOP actually wants to damage the economy. But the media helpfully gives into the frame.

Most Congressmen aren't babies. Some are.

In 2013, let's get rid of the "pox on both their houses" way of looking at things.

Forgive my ignorance, but why cant the Greeks print more of their own money?
I thought every country could print their own money.

One common result, which Cyclo cited, is is runaway inflation. There is mothing mild about the consequences of that as Germany learned in the early 1930s.

Funny that Cyclo appears to think that that is an impossibility for us.

As long as the rest of the world remains confident in our financial system, we can print pretty much as much money as we like with very little ill effect - and that's exactly what we have seen over the last 5 years.

Sure it's possible for America to have hyperinflation like Germany did in the early 1920s. All she would have to do is start a world war, deficit-finance her military buildup, lose the world war, incur impossible demands for reparations as a condition for armistice, lose the greater part of her industrial base as another condition for armistice, and hence be left incapable of producing the goods with which to pay her reparations and her past military buildup.

It's almost too easy!

Thomas wrote:

Sure it's possible for America to have hyperinflation like Germany did in the early 1920s. All she would have to do is start a world war, deficit-finance her military buildup, lose the world war, incur impossible demands for reparations as a condition for armistice, lose the greater part of her industrial base as another condition for armistice, and hence be left incapable of producing the goods with which to pay her reparations and her past military buildup.

It's almost too easy!

I don't want to quibble about the definition of hyperinflation, instead preferring to note that in general sustained double digit inflation is harmfully distorting to both the social and economic structures of countries enduring it. This, coupled with low real exonomic growth, is both harmful in itself, and sets the stage for possible runaway inflational spirals. It isn't as difficult as you imply to get there. Argentina and Venezuela are there now. Greece would be too were it not for the constraints associated with the Euro (or any fixed currency) which inflicts its pain in different ways.

Instead, I think I'll keep pointing out to the readers of A2K the fact that you don't know much about the majority of discussions you engage in here. Also, you're a rank asshole who deserves to have people tell him that to his face from time to time. So I think I'm gonna go ahead and keep that up for a bit.
Cycloptichorn

McConnell demands unbalanced deal

Senate Minority Leader Mitch McConnell (R-Ky.) had a busy morning yesterday, appearing on NBC, ABC, and CBS to repeat his favorite talking points. For example, viewers got to hear the Republican complain, five times, that the nation has a "massive spending addiction," though the rhetoric has no basis in reality. McConnell also insisted President Obama is "unwilling" to cut spending, suggesting the Minority Leader may be suffering from a poor memory.

Of particular interest, though, were McConnell's thoughts on creating a new debt-ceiling crisis.

For those who can't watch clips online, McConnell remains unembarrassed by the notion of threatening to hurt Americans on purpose to force cuts to Social Security and Medicare -- cuts he expects the White House to initiate in the hopes of making Republicans happy (and giving them cover). But David Gregory also asked specifically about applying new revenues, not through higher tax rates, but through tax reform. McConnell replied:

Yeah, that's over. I'm in favor of doing tax reform, but I think tax reform ought to be revenue neutral as it was back during the Reagan years. We've resolved this issue. Look, we don't have this problem because we tax too little. We have it because we spend way, way too much. So we've settled the tax issue."

This was an important quote because it suggests the Republican-created crisis is much more likely to get worse before it gets better.

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Stepping back and looking at the coming fight in the larger context, a resolution should be relatively simple. Sometime between now and the end of February, policymakers have to work out a deal worth about $1.2 trillion, and the White House has said the agreement needs to be "balanced."

With that in mind, the picture is easy to imagine -- Republicans accept $600 billion or so in new revenue through closed loopholes and deductions, Democrats accept $600 billion or so in entitlement "reforms." The whole deal could come together relatively easily.

Indeed, let's not forget that a month ago, GOP leaders, including House Speaker John Boehner (R-Ohio), were prepared to accept new revenue as part of a bipartisan fiscal deal, and said they wanted that new revenue to come exclusively through tax reform. In fact, as far as Boehner was concerned, policymakers can find up to $800 billion in new revenue to apply towards debt reduction entirely through the reform process, without touching rates at all.

Now, however, we're seeing a sharp shift in posture. As far as McConnell is concerned, Republicans could offer a balanced deal, and could offer hundreds of billions of dollars in revenue to reduce the debt, and did propose this just a few weeks ago, but now the idea is off the table. Why? Because Republicans say so.

Obama is looking for a 50-50 deal; McConnell is demanding a 100-0 deal. There's an obvious resolution, and 24 hours ago, McConnell ruled it out entirely.

But let’s focus on this claim, from Republicans, that Obama only wants to raise taxes and isn’t serious about spending cuts. Here’s an analysis from one senior Republican aide, as relayed to ABC News’ Jonathan Karl:

The White House keeps saying it wants a ‘balanced approach’ but this offer is completely unbalanced and unrealistic. It calls for $1.6 trillion in tax hikes – all of that upfront – in exchange for only $400 billion in spending cuts that come later. Plus, the only entitlement changes they proposed come from the exact proposals in the President’s budget.

The trouble with this analysis is that it ignores history: As part of the 2011 Budget Control Act, Obama agreed to spending reductions of about $1.5 trillion over the next ten years. If you count the interest, the savings is actually $1.7 trillion. Boehner should have no problem remembering the details of that deal: As Greg Sargent points out, Boehner at the time actually gloated about the fact that the deal was "all spending cuts."


And now, with this latest offer, Obama is proposing yet more spending reductions, to the tune of several hundred billion dollars. Add it up and it’s more than $2 trillion in spending cuts Obama has either signed into law or is endorsing now. That’s obviously greater than the $1.6 trillion in new tax revenue he’s seeking.

Senate Minority Leader Mitch McConnell (R-Ky.) had a busy morning yesterday, appearing on NBC, ABC, and CBS to repeat his favorite talking points.